The Institution

The Federal Planning Bureau (FPB) is an independent public agency. It draws up studies and projections on economic, social and environmental policy issues and on the integration of these policies within a context of sustainable development.

Michel Englert

Michel Englert (graduate in economics, Université libre de Bruxelles, 1976) started his professional career in various domains and institutions (the Université libre de Bruxelles, the Universidad Autonoma of Mexico, several research firms and the Federal Planning Bureau, where he worked in the field of energy demand modelling). After working as an assistant professor at the Université libre de Bruxelles from 1982 until 1983, he returned to the Federal Planning Bureau (FPB) to work in the following domains: economic forecasting, interactions between compulsory taxation and macroeconomic context, impact analysis of shocks on the Belgian economy, fiscal policy and long-term forecasts of public finances. In the latter field, he elaborated the first version of the central model of the MALTESE system of models (Model for Analysis of Long-Term Evolution of Social Expenditure), which was designed to assess the budgetary cost of ageing and is presently still being utilized.

Since 1995, Michel Englert has been Plan Advisor and Head of the Directorate General of the FPB. The Directorate General is charged with the study of short-, medium- and long-term macroeconomic and budgetary evolutions with regard to the Belgian economy and the impact on those evolutions of economic policy measures and other shocks. He also leads the Belgian delegations to the EPC Working Group on Ageing Populations and Sustainability of the Economic Policy Committee of the ECOFIN Council and to the OECD working group Macroeconomic and structural policies. He participates in the Belgian delegation to the Social Protection Committee of the EPSCO Council and represents the FPB in the Study Committee on Ageing and in the Steering Committee of the Knowledge Centre on Pensions.

Economic activity in Belgium increased strongly during the second half of last year thanks to the net improvement in export growth as well as sustained internal demand. On average, GDP growth reached 2.5% in 1999, confirming the scenario of a short-lived slowdown between mid-98 and mid-99.

The upward trend in nearly all demand components will result in a positive carry-over effect for the year 2000. Moreover, leading indicators are so far pointing towards a further improvement in economic growth in the first half of the current year, with growth stabilising at a high level in the third quarter. This year, Belgian GDP growth should reach 3.2%. Internal demand will be boosted by sustained growth in private consumption, thanks among other things to a high job creation rate (+1.4%), and also by a positive contribution from stockbuilding towards economic growth (+0.3%). The contribution of external trade (+0.4%) will be favoured by the dynamism of world trade and the improvement in price competitiveness. The public sector borrowing requirement should diminish and nearly reach equilibrium (-0.1% of GDP), thanks to the fall in interest payments and the increase in the primary surplus.

The medium-term outlook for Belgium is pointing towards a GDP growth rate of 2.6% per year during the 2001-2005 period, mostly supported by exports and business investment. The economic fundamentals of the euro area should be the main driving force behind those prospects: fiscal consolidation should not require new measures and the slightly accelerated pace of inflation (around 2% in the medium term) in Europe should not threaten price stability and the low level of real interest rates. Despite the further significant decrease of the unemployment rate in the euro area, acceleration in wage inflation should be limited.

Annual employment growth in Belgium should be around 0.8% between 2001 and 2005. The labour force will still increase in spite of unfavourable demographic developments (the baby-boom generation is entering the 55-60 age range), thanks to higher participation rates among females and over-50s. The acceleration of wage inflation in Belgium should be broadly in line with the average of our three main trading partners. The pace of growth in consumer prices should be around 1.5% on average between 2000 and 2005. On the basis of a “no change in policy” scenario, the general government financing capacity should become positive from 2001 onwards. Compared to the budgetary target set out in the 2000-2003 stability program (surplus of 0.2% GDP in 2003), “cumulative budgetary margins” will reach 2.2% GDP in 2005.

Belgian GDP grew by 2.9% in 1997. GDP growth should hardly be reduced this and next year: the FPB expects a growth rate of 2.8% in 1998 and 2.6% in 1999.

So far, the FPB expected the negative impact of the Asian crisis to be neutralised by a more dynamic domestic demand. While exports do actually slow down, it seems that domestic demand more than compensates for this.

The good figures for domestic demand in 1998 concern mainly private consumption. They are influenced by the concentrated purchases of cars after the biannual Motor Show but also by a number of other special factors positively affecting household disposable income. These will not be present in 1999 so that smaller growth rates for real disposable income as well as private consumption are expected.

Employment creation should contribute substantially to the income growth of households during 1998 and 1999. For both years, employment should increase by about 45,000 people (or about 1.2%), which is considerable compared to the past seven years.

About a quarter of the job creation can be attributed to special programmes, which are mainly taking place in enterprises. Moreover, wage moderation, as well as further cuts in employers’ contributions to social security contribute to a more labour-intensive growth and an improvement of competitiveness.

The business investment rate should continue to climb, but remains relatively low compared to the end of the 80's.

The wage evolution in 1999 remains dependent on the “Wage norm”. Wage moderation in the neighbouring countries constraints the wage evolution in Belgium. Gross hourly wages in the private sector are expected to increase by 1.2% in real terms in 1999. The risk of wage inflation is therefore limited, even though labour market shortages could emerge.

Somewhat stronger import price increases and a slightly positive output gap lead to a small rise in the inflation rates in 1999 (1.3%, compared to 1.1% in 1998). Interest rates should also slightly increase in the Euro zone as well as in Belgium.